Andalas Energy and Power Plc First G2P Project Submitted for Government Approval
16 December 2016 - 6:00PM
UK Regulatory
TIDMADL
16 December 2016
Andalas Energy and Power Plc
('Andalas', or the 'Company')
First Gas-to-Power Project Submitted for Government Approval
Andalas Energy and Power Plc, the AIM traded Indonesian focused energy company
(AIM: ADL), is pleased to announce that it has submitted an application for its
first gas to power project of 2 x 30MW ('the Project') to be included in the
Republic of Indonesia's Electricity Supply Business Plan ('RUPTL'). The
application follows the signing of an agreement with PT Pertamina (Persero)
('Pertamina'), Indonesia's national energy company, to fast-track the
commercialisation of proven gas fields within Pertamina's acreage in Sumatra,
via the roll-out of the Company's gas to power strategy (see announcement of 1
September 2016 for further details).
First Gas to Power Project with Pertamina
* Project is in line with strategy to develop a portfolio of small (i.e. less
than 100 MW) independent power producer projects ('IPPs') fired with gas
from proven fields
+ Five IPPs totalling 250-500MW of installed capacity initially targeted
* Application is the culmination of over four months of intensive work by the
Andalas and Pertamina teams and further validates Andalas' in-country
expertise
* Submission completed following a process including identification and
screening of Pertamina's extensive inventory of discovered gas fields;
assessment of regional electricity demand, grid infrastructure and
capacity; gas resources evaluation and modelling; process design; financial
modelling; and the completion of a feasibility study for a two x 30 MW
project in tandem with the engineering division of PT PLN (Persero)
('PLN'), Indonesia's national electricity company
* A technical review is scheduled with PLN to obtain the required approval
prior to the Project being presented to the Energy Minister for final
approval for entry of the Project onto the RUPTL
* Initial preparations and discussions have commenced with major
international contractors in respect of the front-end engineering and
design ('FEED') phase, which will include design and tendering of major
services and equipment, and will continue in the New Year with a view
towards completion in 2017 ahead of construction
Project Finance
* Approval will significantly de-risk the Project, unlock value and open up
multiple funding options including sale of part of its interest to third
parties
* The Project will be project financed with discussions ongoing with
equipment vendors and with the UK export trade agency
* Expressions of interest already received from industry participants and
project finance specialists including power companies and power equipment
suppliers who understand the energy dynamic in Indonesia and the inherent
and future project value
Pipeline of Projects
* First project provides the model for Andalas to develop additional gas to
power projects in Indonesia
* The first project with Pertamina is our primary focus due to the potential
for first power and revenue generation to be fast tracked in cooperation
with Pertamina
* Growing pipeline of identified gas discoveries that can support new
generating capacity of between 50 and 100 MW per project, both in
partnership with Pertamina as well as with third parties, including those
at Tuba Obi East ('TOE'), which remains in Andalas' project inventory
Dave Whitby, CEO of Andalas, said, "To have submitted our first gas to power
project for inclusion on to the RUPTL within four months of signing a
cooperation agreement with Pertamina is testament to the calibre of our
management team and its standing within Indonesia's energy industry. Approval
of our application will be a milestone event for Andalas. Together with the
Project's strong economics, fast pay-back and excellent revenue visibility,
based on long term gas sales contracts, approval will also act as a value
trigger event.
As the co-originator of projects with Pertamina we have the option to farm down
our interest in those projects to future consortium members to provide a source
of capital to finance ongoing operations. Our initial target with Pertamina is
to originate five independent power projects totalling 250-500MW. As we
de-risk the first project, the path through which we will be able to bring
additional projects through the engineering, procurement, financing and
construction phases will continue to be proven.
In our view, Indonesian power represents one of the most attractive investment
opportunities in energy in the entire ASEAN region. Coupled with strong
economic fundamentals, a supportive government and the support of national
energy companies, Andalas expects to maintain its momentum in progressing its
existing projects, whilst continuing to originate new projects. In gas to
power we have identified a company-making opportunity, one which we are focused
on fully capitalising on."
**ENDS**
For further information, please contact:
David Whitby Andalas Energy and Power Plc Tel: +62 21 2783 2316
Sarah Wharry Cantor Fitzgerald Europe Tel: +44 20 7894 7000
Craig Francis (Nominated Adviser and Joint
Broker)
Frank Buhagiar St Brides Partners Limited Tel: +44 20 7236 1177
Susie Geliher
END
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